I’m tracking two systems which I refer to as Version 1 and Version 2. Version 1 is the older Fidelity funds rotational system that I wrote about over 2 years ago. Version 2 is the more recent and updated version.
Starting February 1, I began trading a Fidelity 401K account using version 1. I want to watch version 2 and give it some time to develop an out-of-sample record before committing capital to it.
Below are the results of both versions since February 1.
From the close of February 1st to the close of March 2nd, SPY gained 3.65%. Both versions underperformed.
The good news is that the price I’m getting through Fidelity is the same price Yahoo is publishing in its historical data. There have been no issues with trade executions. The system has been very easy to trade up to this point. The only daily maintenance required is to run the ranking of the funds after the close. There are two funds in version 1 that have exceeded the 30 day minimum hold. As soon as they drop out of the top three, they must be replaced. Version 2 does not currently require any daily maintenance as all three funds are new purchases and must be held for 30 days.
Just wondering…are you using 30 days, as in 30 calendar days or 30 trading days?
Fidelity requires 30 calendar days. They count the day the purchase is made as day 1.
Thanks Shedder- I have a similar system back-tested in Excel but have yet to put it to work in my RolloverIRA, I may watch yours for a bit. Great work.
Shredder,
Your Rotational strategy really has piqued my interest. I am actually applying it to one of my IRAs at Fidelity – but with a twist.
I am sure you are familiar with the Dogs of the Dow strategy. In DoD there is one rule – after determining the stocks in the DOW paying the best dividend return – you don’t use the best or #1. You buy the stocks that come in second, third, fourth … The concept to not to use the top stock is that there might be something wrong with the company because it is paying such a high dividend rate.
So I while I am using your Rotational strategy I also include a rule to not to use the Fund that has the most days above the MA but to use the second, third and fourth.
Based on some of my back-testing I might even change this rule to use the third, fourth and fifth. Here are the results of back-testing with 10 years of data, starting with $30,000, and ignoring your S&P 500 rule to sell all if it’s below its 50dma.
Buying 1,2,3 – $67915
2,3,4 – $75048
3,4,5 – $107249
4,5,6 – $88658.
Thank you and regards,
Joe McVerry
P.S. your blog is one of the many blogs I relink-to on my website.
Joe, thanks for that. I’ll check that out. Very interesting. What is the URL for your site?